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Drivers for ride-hailing companies Lyft and Uber would remain classified as independent contractors rather than employees following a new ruling from the California Supreme Court.

In a unanimous decision, the court upheld Proposition 22, a voter-approved law passed in 2020. Under the law, drivers for companies like Lyft and Uber are considered independent contractors. This means that while they are guaranteed 120% of the local minimum wage for each hour spent driving, they are not entitled to benefits that full-time workers get, including overtime pay, paid sick leave, and unemployment insurance.

The decision puts an end to a yearslong legal dispute on California's gig-worker economy. It also means Lyft and Uber can continue operating as usual, according to the New York Times.

The ruling came after Alameda County Superior Court Judge Frank Roesch in 2021 said the measure was unconstitutional, arguing that it violated the state legislature's ability to amend the proposition.

"A prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, nor does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers," Roesch wrote in the ruling. "It appears only to protect the economic interest of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation."

Responses to the Supreme Court Ruling

Following the court's decision, Lyft issued a response where it said it was thrilled that the proposition was unanimously upheld, adding that Prop 22 was a "win-win for California."

"We are thrilled that the California Supreme Court unanimously upheld the democratic will of the voters and did what's right for California's communities and economy," Lyft said. "We are pleased to continue to bring Californians closer to their friends, family, and neighbors, and provide drivers with access to flexible earnings opportunities and benefits while preserving their independence. Prop. 22 was, and continues to be, a win-win for California."

Uber also celebrated the ruling, adding that it helps maintain flexibility for gig workers and guarantees them benefits.

"Whether drivers or couriers choose to earn just a few hours a week or more, their freedom to work when and how they want is now firmly etched into California law," Noah Edwardsen, an Uber spokesman, said in a statement quoted by The Times.

On the other hand, the California Federation of Labor Unions said the decision was a disappointment, arguing that the court has allowed "tech corporations to buy their way out of basic labor laws."